Datadog Announces Second Quarter 2024 Financial Results
Second quarter revenue grew 27% year-over-year to
Strong growth of larger customers, with about 3,390 $100k+ ARR customers, up from about 2,990 a year ago
Announced general availability of LLM Observability
Announced innovations for Generative AI, Observability, Cloud Security, Product Analytics, Software Delivery, and Cloud Service Management at DASH 2024
"
Pomel added, "At our DASH 2024 user conference, we announced dozens of new products and capabilities, delivering innovations to help our customers observe their environments, secure their infrastructures and workloads, and act to remediate problems before they affect users."
Second Quarter 2024 Financial Highlights:
- Revenue was
$645 million , an increase of 27% year-over-year. - GAAP operating income was
$13 million ; GAAP operating margin was 2%. - Non-GAAP operating income was
$158 million ; non-GAAP operating margin was 24%. - GAAP net income per diluted share was
$0.12 ; non-GAAP net income per diluted share was$0.43 . - Operating cash flow was
$164 million , with free cash flow of$144 million . - Cash, cash equivalents, and marketable securities were
$3.0 billion as ofJune 30, 2024 .
- As of
June 30, 2024 , we had about 3,390 customers with ARR of$100,000 or more, an increase of 13% from about 2,990 as ofJune 30, 2023 . - Announced that
Yanbing Li joined as Chief Product Officer. Li has more than 25 years of product, technology and engineering experience, having led global engineering, operations and infrastructure teams at Aurora,Google andVMware . - Announced that David Galloreese joined as
Chief People Officer . Galloreese has more than 20 years of human resources experience at tech companies and large-scale, high visibility brands, like Figma, Wells Fargo, and Walmart. - Announced new additions to our security product portfolio, including Agentless Scanning, Data Security and Code Security, which allow security teams to easily secure their code, cloud environments and production applications.
- Announced the launch of Live Debugger, a new tool that enables developers to step through code in production environments and find the exact root cause of coding errors.
- Announced a unified experience integrating the Datadog Agent and OpenTelemetry Collector. With this announcement, customers can use
Datadog's fully supported Agent while accessing the complete capabilities of the OpenTelemetry Collector; onboard quickly using the existing collector configuration; and centralize the management of collectors remotely - all while benefiting fromDatadog's reliability and global support team. - Announced Log Workspaces, a suite of capabilities in a powerful, collaborative space that allows analysts and engineers from all teams in an organization to connect logs and other datasets, and build multi-stage queries that allow for sophisticated analytics to answer complex questions on business, securities and application issues.
- Announced Datadog On-Call, a modern on-call experience with observability-enriched paging and seamless incident management workflows.
- Announced the general availability of LLM Observability, which allows AI application developers and machine learning engineers to efficiently monitor, improve and secure large language model applications.
- Announced Datadog Kubernetes Autoscaling, a set of capabilities that intelligently automates resource optimization and can automatically scale customers' Kubernetes environments based on real-time and historical utilization metrics.
- Announced the general availability of Data Jobs Monitoring, a new product that helps data platform teams and data engineers detect problematic Spark and
Databricks jobs anywhere in their data pipelines, remediate failed and long-running-jobs faster, and optimize over-provisioned compute resources to reduce costs. - Announced the general availability of Datadog App Builder, a low-code development tool that helps teams rapidly create self-service applications and integrate them securely into their monitoring stacks.
- Released its State of Cloud Costs 2024 report. The report found organizations that use graphics processing unit (GPU) instances have increased their average spending on those instances by 40% in the last year.
Third Quarter and Full Year 2024 Outlook:
Based on information as of today,
- Third Quarter 2024 Outlook:
- Revenue between
$660 million and$664 million . - Non-GAAP operating income between
$146 million and$150 million . - Non-GAAP net income per share between
$0.38 and$0.40 , assuming approximately 360 million weighted average diluted shares outstanding.
- Revenue between
- Full Year 2024 Outlook:
- Revenue between
$2.62 billion and$2.63 billion . - Non-GAAP operating income between
$620 million and$630 million . - Non-GAAP net income per share between
$1.62 and$1.66 , assuming approximately 360 million weighted average diluted shares outstanding.
- Revenue between
Conference Call Details:
- What:
Datadog financial results for the second quarter of 2024 and outlook for the third quarter and the full year 2024 - When:
August 8, 2024 at8:00 A.M. Eastern Time (5:00 A.M. Pacific Time ) - Dial in: To access the call in the
U.S. , please register here. Callers are encouraged to dial into the call 10 to 15 minutes prior to the start to prevent any delay in joining. - Webcast: https://investors.datadoghq.com (live and replay)
- Replay: A replay of the call will be archived on the investor relations website
About
Forward-Looking Statements
This press release and the earnings call referencing this press release contain "forward-looking" statements, as that term is defined under the federal securities laws, including but not limited to statements regarding
The risks and uncertainties referred to above include, but are not limited to (1) our recent rapid growth may not be indicative of our future growth; (2) our history of operating losses; (3) our limited operating history; (4) our dependence on existing customers purchasing additional subscriptions and products from us and renewing their subscriptions; (5) our ability to attract new customers; (6) our ability to effectively develop and expand our sales and marketing capabilities; (7) risk of a security breach; (8) risk of interruptions or performance problems associated with our products and platform capabilities; (9) our ability to adapt and respond to rapidly changing technology or customer needs; (10) the competitive markets in which we participate; (11) risks associated with successfully managing our growth; and (12) general market, political, economic, and business conditions including concerns about reduced economic growth and associated decreases in information technology spending. These risks and uncertainties are more fully described in our filings with the
About Non-GAAP Financial Measures
Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. A reconciliation of the historical non-GAAP financial measures to their most directly comparable GAAP measures has been provided in the financial statement tables included below in this press release.
Management believes these non-GAAP financial measures are useful to investors and others in assessing
Stock-based compensation. Datadog utilizes stock-based compensation to attract and retain employees. It is principally aimed at aligning their interests with those of its stockholders and at long-term retention, rather than to address operational performance for any particular period. As a result, stock-based compensation expenses vary for reasons that are generally unrelated to financial and operational performance in any particular period.
Amortization of acquired intangibles. Datadog views amortization of acquired intangible assets as items arising from pre-acquisition activities determined at the time of an acquisition. While these intangible assets are evaluated for impairment regularly, amortization of the cost of acquired intangibles is an expense that is not typically affected by operations during any particular period.
Employer payroll taxes on employee stock transactions.
Amortization of issuance costs. In
Additionally,
Operating Metrics
We define the number of customers as the number of accounts with a unique account identifier for which we have an active subscription in the period indicated. Users of our free trials or tier are not included in our customer count. A single organization with multiple divisions, segments or subsidiaries is generally counted as a single customer. However, in some cases where they have separate billing terms, we may count separate divisions, segments or subsidiaries as multiple customers.
We define ARR as the annualized revenue run-rate of subscription agreements from all customers at a point in time. We calculate ARR by taking the monthly recurring revenue, or MRR, and multiplying it by 12. MRR for each month is calculated by aggregating, for all customers during that month, monthly revenue from committed contractual amounts, additional usage, usage from subscriptions for a committed contractual amount of usage that is delivered as used, and monthly subscriptions. ARR and MRR should be viewed independently of revenue, and do not represent our revenue under GAAP on a monthly or annualized basis, as they are operating metrics that can be impacted by contract start and end dates and renewal rates. ARR and MRR are not intended to be replacements or forecasts of revenue.
Condensed Consolidated Statements of Operations (In thousands, except per share data; unaudited) |
||||||||
Three Months Ended |
Six Months Ended |
|||||||
2024 |
2023 |
2024 |
2023 |
|||||
Revenue |
$ 645,279 |
$ 509,460 |
$ 1,256,532 |
$ 991,174 |
||||
Cost of revenue (1)(2)(3) |
123,499 |
101,846 |
233,597 |
201,760 |
||||
Gross profit |
521,780 |
407,614 |
1,022,935 |
789,414 |
||||
Operating expenses: |
||||||||
Research and development (1)(3) |
274,599 |
239,494 |
544,587 |
468,972 |
||||
Sales and marketing (1)(2)(3) |
187,005 |
147,455 |
360,886 |
292,426 |
||||
General and administrative (1)(3) |
47,558 |
42,671 |
92,848 |
84,992 |
||||
Total operating expenses |
509,162 |
429,620 |
998,321 |
846,390 |
||||
Operating income (loss) |
12,618 |
(22,006) |
24,614 |
(56,976) |
||||
Other income (loss): |
||||||||
Interest expense (4) |
(1,477) |
(1,526) |
(2,851) |
(3,707) |
||||
Interest income and other income, net |
36,652 |
22,624 |
72,215 |
39,351 |
||||
Other income, net |
35,175 |
21,098 |
69,364 |
35,644 |
||||
Income (loss) before provision for income taxes |
47,793 |
(908) |
93,978 |
(21,332) |
||||
Provision for income taxes |
3,969 |
3,061 |
7,523 |
6,723 |
||||
Net income (loss) |
$ 43,824 |
$ (3,969) |
$ 86,455 |
$ (28,055) |
||||
Net income (loss) per share - basic |
$ 0.13 |
$ (0.01) |
$ 0.26 |
$ (0.09) |
||||
Net income (loss) per share - diluted |
$ 0.12 |
$ (0.01) |
$ 0.24 |
$ (0.09) |
||||
Weighted average shares used in calculating net income (loss) per share: |
||||||||
Basic |
334,941 |
322,215 |
333,373 |
320,788 |
||||
Diluted |
356,740 |
322,215 |
356,650 |
320,788 |
||||
(1) Includes stock-based compensation expense as follows: |
||||||||
Cost of revenue |
$ 6,393 |
$ 4,157 |
$ 11,920 |
$ 7,882 |
||||
Research and development |
87,105 |
75,730 |
175,518 |
150,433 |
||||
Sales and marketing |
29,201 |
25,884 |
57,732 |
48,898 |
||||
General and administrative |
11,953 |
12,566 |
24,515 |
23,852 |
||||
Total |
$ 134,652 |
$ 118,337 |
$ 269,685 |
$ 231,065 |
||||
(2) Includes amortization of acquired intangibles as follows: |
||||||||
Cost of revenue |
$ 1,281 |
$ 2,064 |
$ 3,308 |
$ 4,080 |
||||
Sales and marketing |
205 |
206 |
410 |
409 |
||||
Total |
$ 1,486 |
$ 2,270 |
$ 3,718 |
$ 4,489 |
||||
(3) Includes employer payroll taxes on employee stock transactions as follows: |
||||||||
Cost of revenue |
$ 68 |
$ 109 |
$ 260 |
$ 169 |
||||
Research and development |
6,589 |
5,360 |
17,408 |
9,953 |
||||
Sales and marketing |
608 |
1,253 |
2,761 |
2,028 |
||||
General and administrative |
1,521 |
1,143 |
3,578 |
2,108 |
||||
Total |
$ 8,786 |
$ 7,865 |
$ 24,007 |
$ 14,258 |
||||
(4) Includes amortization of issuance costs as follows: |
||||||||
Interest expense |
$ 910 |
$ 846 |
$ 1,760 |
$ 1,691 |
||||
Total |
$ 910 |
$ 846 |
$ 1,760 |
$ 1,691 |
Condensed Consolidated Balance Sheets (In thousands; unaudited) |
||||
|
|
|||
ASSETS |
||||
CURRENT ASSETS: |
||||
Cash and cash equivalents |
$ 410,963 |
$ 330,339 |
||
Marketable securities |
2,549,143 |
2,252,559 |
||
Accounts receivable, net of allowance for credit losses of |
533,292 |
509,279 |
||
Deferred contract costs, current |
49,518 |
44,938 |
||
Prepaid expenses and other current assets |
49,174 |
41,022 |
||
Total current assets |
3,592,090 |
3,178,137 |
||
Property and equipment, net |
198,911 |
171,872 |
||
Operating lease assets |
166,941 |
126,562 |
||
|
350,864 |
352,694 |
||
Intangible assets, net |
5,804 |
9,617 |
||
Deferred contract costs, non-current |
77,040 |
73,728 |
||
Other assets |
20,741 |
23,462 |
||
TOTAL ASSETS |
$ 4,412,391 |
$ 3,936,072 |
||
LIABILITIES AND STOCKHOLDERS' EQUITY |
||||
CURRENT LIABILITIES: |
||||
Accounts payable |
$ 115,991 |
$ 87,712 |
||
Accrued expenses and other current liabilities |
104,791 |
127,631 |
||
Operating lease liabilities, current |
24,565 |
21,974 |
||
Convertible senior notes, net, current |
743,970 |
— |
||
Deferred revenue, current |
801,562 |
765,735 |
||
Total current liabilities |
1,790,879 |
1,003,052 |
||
Operating lease liabilities, non-current |
193,835 |
138,128 |
||
Convertible senior notes, net, non-current |
— |
742,235 |
||
Deferred revenue, non-current |
14,049 |
21,210 |
||
Other liabilities |
6,320 |
6,093 |
||
Total liabilities |
2,005,083 |
1,910,718 |
||
STOCKHOLDERS' EQUITY: |
||||
Common stock |
3 |
3 |
||
Additional paid-in capital |
2,484,264 |
2,181,267 |
||
Accumulated other comprehensive loss |
(9,716) |
(2,218) |
||
Accumulated deficit |
(67,243) |
(153,698) |
||
Total stockholders' equity |
2,407,308 |
2,025,354 |
||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
$ 4,412,391 |
$ 3,936,072 |
Condensed Consolidated Statements of Cash Flow (In thousands; unaudited) |
||||||||
Three Months Ended |
Six Months Ended |
|||||||
2024 |
2023 |
2024 |
2023 |
|||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
||||||||
Net income (loss) |
$ 43,824 |
$ (3,969) |
$ 86,455 |
$ (28,055) |
||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
||||||||
Depreciation and amortization |
12,440 |
10,550 |
25,335 |
20,825 |
||||
(Accretion) amortization of (discounts) premiums on marketable securities |
(12,569) |
(8,096) |
(26,695) |
(13,291) |
||||
Amortization of issuance costs |
910 |
846 |
1,760 |
1,691 |
||||
Amortization of deferred contract costs |
12,450 |
9,348 |
24,294 |
17,996 |
||||
Stock-based compensation, net of amounts capitalized |
134,652 |
118,337 |
269,685 |
231,065 |
||||
Non-cash lease expense |
6,781 |
6,252 |
13,591 |
12,196 |
||||
Allowance for credit losses on accounts receivable |
3,842 |
2,579 |
6,574 |
6,311 |
||||
Loss on disposal of property and equipment |
300 |
333 |
343 |
421 |
||||
Changes in operating assets and liabilities: |
||||||||
Accounts receivable, net |
(86,076) |
31,366 |
(30,586) |
60,139 |
||||
Deferred contract costs |
(19,534) |
(15,868) |
(32,170) |
(27,618) |
||||
Prepaid expenses and other current assets |
5,632 |
(1,013) |
(8,443) |
(16,823) |
||||
Other assets |
(443) |
2,077 |
2,171 |
2,241 |
||||
Accounts payable |
48,692 |
6,352 |
31,570 |
24,897 |
||||
Accrued expenses and other liabilities |
(8,423) |
(16,009) |
(15,856) |
(44,089) |
||||
Deferred revenue |
21,946 |
10,073 |
28,666 |
39,039 |
||||
Net cash provided by operating activities |
164,424 |
153,158 |
376,694 |
286,945 |
||||
CASH FLOWS FROM INVESTING ACTIVITIES: |
||||||||
Purchases of marketable securities |
(602,950) |
(632,547) |
(1,240,301) |
(1,390,334) |
||||
Maturities of marketable securities |
564,319 |
520,669 |
965,985 |
1,018,317 |
||||
Proceeds from sale of marketable securities |
8 |
15,292 |
8 |
36,633 |
||||
Purchases of property and equipment |
(4,415) |
(2,339) |
(18,573) |
(11,078) |
||||
Capitalized software development costs |
(16,229) |
(9,087) |
(27,594) |
(17,798) |
||||
Cash paid for acquisition of businesses; net of cash acquired |
(444) |
(2,025) |
(444) |
(2,025) |
||||
Net cash used in investing activities |
(59,711) |
(110,037) |
(320,919) |
(366,285) |
||||
CASH FLOWS FROM FINANCING ACTIVITIES: |
||||||||
Proceeds from exercise of stock options |
1,753 |
5,436 |
3,944 |
7,534 |
||||
Proceeds for issuance of common stock under the employee stock purchase plan |
22,507 |
19,986 |
22,507 |
19,986 |
||||
Repayments of convertible senior notes |
(25) |
— |
(25) |
— |
||||
Net cash provided by financing activities |
24,235 |
25,422 |
26,426 |
27,520 |
||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
(203) |
213 |
(1,577) |
836 |
||||
|
128,745 |
68,756 |
80,624 |
(50,984) |
||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH—Beginning of period |
282,218 |
222,548 |
330,339 |
342,288 |
||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH—End of period |
$ 410,963 |
$ 291,304 |
$ 410,963 |
$ 291,304 |
||||
RECONCILIATION OF CASH AND CASH EQUIVALENTS WITHIN THE CONDENSED CONSOLIDATED BALANCE SHEETS TO THE AMOUNTS |
||||||||
Cash and cash equivalents |
$ 410,963 |
$ 291,304 |
$ 410,963 |
$ 291,304 |
||||
Total cash and cash equivalents |
$ 410,963 |
$ 291,304 |
$ 410,963 |
$ 291,304 |
Reconciliation from GAAP to Non-GAAP Results (In thousands, except per share data; unaudited) |
||||||||
Three Months Ended |
Six Months Ended |
|||||||
2024 |
2023 |
2024 |
2023 |
|||||
Reconciliation of gross profit and gross margin |
||||||||
GAAP gross profit |
$ 521,780 |
$ 407,614 |
$ 1,022,935 |
$ 789,414 |
||||
Plus: Stock-based compensation expense |
6,393 |
4,157 |
11,920 |
7,882 |
||||
Plus: Amortization of acquired intangibles |
1,281 |
2,064 |
3,308 |
4,080 |
||||
Plus: Employer payroll taxes on employee stock transactions |
68 |
109 |
260 |
169 |
||||
Non-GAAP gross profit |
$ 529,522 |
$ 413,944 |
$ 1,038,423 |
$ 801,545 |
||||
GAAP gross margin |
81 % |
80 % |
81 % |
80 % |
||||
Non-GAAP gross margin |
82 % |
81 % |
83 % |
81 % |
||||
Reconciliation of operating expenses |
||||||||
GAAP research and development |
$ 274,599 |
$ 239,494 |
$ 544,587 |
$ 468,972 |
||||
Less: Stock-based compensation expense |
(87,105) |
(75,730) |
(175,518) |
(150,433) |
||||
Less: Employer payroll taxes on employee stock transactions |
(6,589) |
(5,360) |
(17,408) |
(9,953) |
||||
Non-GAAP research and development |
$ 180,905 |
$ 158,404 |
$ 351,661 |
$ 308,586 |
||||
GAAP sales and marketing |
$ 187,005 |
$ 147,455 |
$ 360,886 |
$ 292,426 |
||||
Less: Stock-based compensation expense |
(29,201) |
(25,884) |
(57,732) |
(48,898) |
||||
Less: Amortization of acquired intangibles |
(205) |
(206) |
(410) |
(409) |
||||
Less: Employer payroll taxes on employee stock transactions |
(608) |
(1,253) |
(2,761) |
(2,028) |
||||
Non-GAAP sales and marketing |
$ 156,991 |
$ 120,112 |
$ 299,983 |
$ 241,091 |
||||
GAAP general and administrative |
$ 47,558 |
$ 42,671 |
$ 92,848 |
$ 84,992 |
||||
Less: Stock-based compensation expense |
(11,953) |
(12,566) |
(24,515) |
(23,852) |
||||
Less: Employer payroll taxes on employee stock transactions |
(1,521) |
(1,143) |
(3,578) |
(2,108) |
||||
Non-GAAP general and administrative |
$ 34,084 |
$ 28,962 |
$ 64,755 |
$ 59,032 |
||||
Reconciliation of operating income (loss) and operating margin |
||||||||
GAAP operating income (loss) |
$ 12,618 |
$ (22,006) |
$ 24,614 |
$ (56,976) |
||||
Plus: Stock-based compensation expense |
134,652 |
118,337 |
269,685 |
231,065 |
||||
Plus: Amortization of acquired intangibles |
1,486 |
2,270 |
3,718 |
4,489 |
||||
Plus: Employer payroll taxes on employee stock transactions |
8,786 |
7,865 |
24,007 |
14,258 |
||||
Non-GAAP operating income |
$ 157,542 |
$ 106,466 |
$ 322,024 |
$ 192,836 |
||||
GAAP operating margin |
2 % |
(4) % |
2 % |
(6) % |
||||
Non-GAAP operating margin |
24 % |
21 % |
26 % |
19 % |
Reconciliation from GAAP to Non-GAAP Results (In thousands, except per share data; unaudited) |
||||||||
Three Months Ended |
Six Months Ended |
|||||||
2024 |
2023 |
2024 |
2023 |
|||||
Reconciliation of net income (loss) |
||||||||
GAAP net income (loss) |
$ 43,824 |
$ (3,969) |
$ 86,455 |
$ (28,055) |
||||
Plus: Stock-based compensation expense |
134,652 |
118,337 |
269,685 |
231,065 |
||||
Plus: Amortization of acquired intangibles |
1,486 |
2,270 |
3,718 |
4,489 |
||||
Plus: Employer payroll taxes on employee stock transactions |
8,786 |
7,865 |
24,007 |
14,258 |
||||
Plus: Amortization of issuance costs |
910 |
846 |
1,760 |
1,691 |
||||
Non-GAAP net income before non-GAAP tax adjustments |
$ 189,658 |
$ 125,349 |
$ 385,625 |
$ 223,448 |
||||
Income tax effects and adjustments (1) |
36,693 |
23,905 |
75,038 |
41,613 |
||||
Non-GAAP net income after non-GAAP tax adjustments |
$ 152,965 |
$ 101,444 |
$ 310,587 |
$ 181,835 |
||||
Net income per share before non-GAAP tax adjustments - basic |
$ 0.57 |
$ 0.39 |
$ 1.16 |
$ 0.70 |
||||
Net income per share before non-GAAP tax adjustments - diluted |
$ 0.53 |
$ 0.36 |
$ 1.08 |
$ 0.64 |
||||
Net income per share after non-GAAP tax adjustments - basic |
$ 0.46 |
$ 0.31 |
$ 0.93 |
$ 0.57 |
||||
Net income per share after non-GAAP tax adjustments - diluted |
$ 0.43 |
$ 0.29 |
$ 0.87 |
$ 0.52 |
||||
Shares used in non-GAAP net income per share calculations: |
||||||||
Basic |
334,941 |
322,215 |
333,373 |
320,788 |
||||
Diluted |
356,740 |
348,551 |
356,650 |
347,311 |
1) |
Non-GAAP financial information for the periods shown are adjusted for an assumed provision for income taxes based on our long-term projected tax rate of 21%. Due to the differences in the tax treatment of items excluded from non-GAAP earnings, our estimated tax rate on non-GAAP income may differ from our GAAP tax rate and from our actual tax liabilities. |
Reconciliation of GAAP Cash Flow from Operating Activities to Free Cash Flow (In thousands; unaudited) |
||||||||
Three Months Ended |
Six Months Ended |
|||||||
2024 |
2023 |
2024 |
2023 |
|||||
Net cash provided by operating activities |
$ 164,424 |
$ 153,158 |
$ 376,694 |
$ 286,945 |
||||
Less: Purchases of property and equipment |
(4,415) |
(2,339) |
(18,573) |
(11,078) |
||||
Less: Capitalized software development costs |
(16,229) |
(9,087) |
(27,594) |
(17,798) |
||||
Free cash flow |
$ 143,780 |
$ 141,732 |
$ 330,527 |
$ 258,069 |
||||
Free cash flow margin |
22 % |
28 % |
26 % |
26 % |
Contact Information
Datadog Investor Relations
IR@datadoghq.com
Datadog Public Relations
Press@datadoghq.com
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